First Party Bad Faith Passes the Maryland Legislature

The Maryland Senate has passed House Bill 425 and the Maryland House of Delegates today also passed the bill which puts a new requirement of good faith for insurance company dealing with their insureds. The bill now heads to Governor O’Malley for his signature. The Governor has previously pledged support for the bill.

This issue has been a reoccurring topic on the Maryland Personal Injury Lawyer Blog. See this post, that post and this post. My partner,Laura G. Zois testified before the Maryland Senate and House of Delegates about three weeks ago on this very issue. I know that after the bill passed the Maryland Senate there was a lot of lobbying efforts from the insurance companies to keep it from passing in the House of Delegates. The vote was pushed back and I began to really doubt whether Maryland would join the majority of states in this country that have first party bad faith. I’m thrilled the Maryland Assembly put the interest of Maryland injury victims and consumers ahead of the insurance company and their lobbyists.

This is a huge win for victims and their attorneys who are fighting to get injury victims a fair recovery for their injuries and the benefits of the insurance contract for which they are paying premiums.

2013 Update: Who is kidding who? This was not a win at all. I don’t know what we were are thinking. This bill is toothless.

Am I reading the correct version of the bill? I found an early version that permitted recovery of noneconomic damages in addition to contract damages. But today, 425 appears to be limited to policy benefits plus expenses and atty fees. Not to minimize the recovery of expenses and atty fees, but I don’t think there’s much here to scare insurance companies or much more than was available under current law.

Couldn’t an insured always sue the carrier for policy benefits? The big worry for insureds is an award in excess of policy limits because the carrier hangs the insured out to dry. As I recall, in Maryland the abandoned insured could not assign the excess judgment to the plaintiff to pursue the carrier because of no first-party bad faith. Which left defense counsel, trying to protect the interests of the client, in a tough spot.

What am I missing? Admittedly, I’ve been away from this stuff for about 5 years, and I may be recalling incorrectly the law on the issue.

Ron Miller

Tony, I think you are largely correct. But first party bad faith is important because, as I’m sure you remember, insurance companies hate bad faith hits in a way that the pure economics of an individual case do not dictate. I think this is primarily because some jurisdictions require bad faith to be not just isolated but a course of conduct, making bad faith hits in other jurisdictions discoverable and relevant to the question of whether the insurance company acted in bad faith. As such, I really do believe we will start getting reasonable offers in uninsured motorist cases.

yvette

Who is the primary insurance carrier for a passenger in a rental vehicle for personal injury protection coverage? Should the passenger have coverage for medical bills and wages with the rental company if they do not have an insurance policy of their own and does not reside with a relative that has a policy? or should the passenger go to the drivers policy that covers the replacement vehicle?

Wen

Hi,We want to file a BAD FAITH INSURANCE complaint with MIA, but MIA said “It is this Administration’s position that the lack of good faith statute applies only to an act or omission occurring on or after the effective date of the Act, which is October 1, 2007. You will need to consult with an attorney for further advice in this regard.”

We had filed a normal complaint with MIA but did not indicate it is a bad faith complaint on 1/08. so we tried to ask MIA to consider for the pending complaint as a “bad faith” complaint but got the above reply.

Since our damaged was occurred on 2005, almost 3 years ago and the 3 years of the statute of limitation is running out in weeks, So how could we file a bad faith complaint with MIA FIRST (before file the suit at court) as required by the MD law that allow the bad faith claim applies to all PENDING case like ours?

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